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Business

Daikin, Panasonic eye broad A/C tie-up

OSAKA -- Daikin Industries and Panasonic seek to form a comprehensive partnership in air conditioners, with plans to jointly develop next-generation environmental technologies and procure parts.

Already major players in the industry, the Japanese companies aim to further boost sales by joining forces in bringing state-of-the-art technologies to emerging and other markets.

Daikin leads the global air conditioner market and is strong in commercial products, while Panasonic ranks first in Japan in household products.

Daikin President Masanori Togawa and Panasonic President Kazuhiro Tsuga met recently and agreed to begin tie-up talks. They hope to finalize an agreement this summer.

Daikin lifted group sales above 2 trillion yen ($18.4 billion) for the first time in the fiscal year ended March 31. It sees expanding emerging-market operations as key to raising the figure to 3 trillion yen.

Panasonic plans to increase sales in its air conditioner business to 700 billion yen in the year ending March 2019, up 50% from fiscal 2015. But it faces tougher conditions, such as the slowdown in the Chinese economy.

The companies are expected to discuss a wide range of areas to partner in, including developing environmental technologies, procuring core parts, mutually supplying products and cultivating emerging markets.

Refrigerant will be among the first tie-up areas. Daikin and Panasonic will likely work together to adopt environmentally friendlier refrigerants for air conditioners sold in emerging countries.

Different types of refrigerants require different handling with regard to safety and other aspects, affecting air conditioner designs. Regulations vary by country and region, and Daikin and Panasonic aim to use their expertise in the field to increase sales. They will likely cooperate in providing sales agents with technical assistance in such areas as refrigerant-charging and -checking. Joint development of next-generation refrigerants will also be considered.

The duo will also consider mutual supply of products and joint procurement of such core parts as motors and compressors. Daikin may supply parts to Panasonic through its production bases in Europe, the U.S. and Asia.

They will also discuss producing air conditioners on an original equipment manufacturing basis. Such an arrangement could help the companies make better use of management resources, since air conditioner makers must develop many types of products for different climates and room sizes.

The two companies teamed up in such areas as joint development back in 1999. But that partnership failed to deliver the desired benefits amid tough competition in Japan and ended up being effectively dissolved.

The global air conditioner market is dominated by Daikin, China's Gree Electric Appliances and American manufacturer United Technologies. Daikin formed a partnership with Gree in 2008.

(Nikkei)

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